Q4 2024 Carnival Corp & PLC Earnings Call

Yields finished the year nearly 250 basis points better than our original guidance driven by a strong demand environment that we elevated throughout the year.

Encouragingly this was broadbased for 'twenty 'twenty four prices were up in all of our major brands and trades between mid single digit to mid teen percentages.

And on top of this onboard spending levels actually accelerated sequentially each quarter throughout the year.

Additionally unit costs came in 100 basis points better than our original guidance for the year as we identified and executed upon additional cost savings initiatives and saw the benefit of an easing inflationary environment.

All of this translated to an additional $700 million pick up to the bottom line compared to our December guidance and step change improvements in our two financial metrics that form part of our 20th twenty-six sea change targets EBITDA per a L. P D and Roy I see.

After just one year down with two to go we're already over 80% of the way towards achieving both of these targets, calling for a 50% increase in EBITDA for a L. B D from our 'twenty to 'twenty three starting point.

And ROIC of 12% both of which would be the highest the company has seen in almost 20 years.

And with Rois see ending 'twenty 'twenty four at 11%.

Comfortably above our cost of capital we are already delivering long term value for our shareholders. As we lay the foundation will build upon in 2020 five and beyond.

At the outset and with about two thirds of the year already on the books 20 twenty-five is shaping up to be another banner year with yield growth exceeding 4% far outpacing historical growth rates and again exceeding unit cost growth delivering more than $400 million incrementally.

<unk> to the bottom line.

In fact booking trends even accelerated during the quarter.

Despite less inventory for sale as compared to the same time last year 'twenty twenty-five booking volumes over the quarter were actually higher year on year at higher prices for each quarter, including the period, leading up to the election bookings.

Booking volumes for 2020 six also continue to break records, reflecting sustained demand even for further out sailings.

The ongoing strength and demand reinforced our record breaking book position, both price and occupancy are higher for each of the four quarters of 2025, and we managed to increase both our price and occupancy advantage for our 'twenty twenty-five book position, thanks to our outstanding effort.

This past quarter I can actually now report that our North American and European segments are each at their longest advanced booking windows on record.

All core deployments are also better booked at higher prices than the record levels. We achieved at the same time last year, so with a good amount less inventory to sell for 2025, I cannot stress enough to our customers and trade partners that if you want a sail with US this year book now.

While there is still space available and <unk>.

Keep in mind, our 'twenty 'twenty four results and book position for future sailings are being driven by improved operational execution across our brands and are essentially on the same ship basis now don't get me wrong New ships are great.

Fact, we welcomed three amazing new ships in 2024.

Arnold you believe the third of five X L class vessels for Carnival cruise line.

Proudly sailing out of the great State of Texas, Some Princess Princess Cruises next generation flagship was just awarded <unk> Nast travellers 'twenty 'twenty four mega ship of the year, beating out all other mega shifts that entered service this year.

And last but not least came the spectacular Queen Anne Qunar. Its first ship in 14 years and a beautiful addition to Queen Victoria, Queen Elizabeth and the Venerable Queen Mary two.

While new ships do command a nice premium the vast majority of our yield growth was driven by fundamental demand improvements for the existing ships across our portfolio of world class brands.

Even excluding our new builds 'twenty 'twenty fours yields were still up almost 10% over 2023 that's because we're achieving demand growth well above our modest supply pipeline through ground up efforts to improve execution across the commercial space, we've been investing in both Tao.

<unk> and tools <unk>.

In on each of our brand's unique target markets crafting marketing campaigns that speak directly to them and in the most effective forums, where success really enticing new cruise gas away from land based alternatives in fact, both new to cruise and repeat guests were each up double digits.

We're centered just this past year at.

At the same time, our marketing efforts are continuing to deliver growth and web visits natural and paid search that far outpaced our limited capacity growth keeping the pipeline of new demand full Samuel Tenuously with augmenting our performance from top of funnel consideration.

To closing the deal in generating the bookings we've been sharpening our yield management techniques to optimize our booking curves and drive ticket prices in onboard spending higher.

All of these efforts are already in flight and clearly working we have even more in store to continue the momentum.

We're launching new marketing campaigns across all our brands.

Princess Cunard and seaborne have already debuted spectacular new creators this month and princesses case, it's fresh take on its incomparable love boat theme, featuring Hana wanting them of Ted last time Fame already helped to produce record booking volumes for the black Friday through cyber Monday period and.

Stay tuned for new campaigns from Aida Carnival, Costa Holland America, and P. N O cruises in the U K all launching shortly to coincide with wave season, our peak booking period, we're aggressively working to increase awareness and consideration for cruise travel globally.

We're also actively working on an enhanced destination strategy to provide guests with yet another reason to take a cruise vacation with us and that is sure to help us continue to excel.

We retained by far the largest footprint in the Caribbean with six owned and operated destinations that captured six and a half a million guest visits in 'twenty 'twenty. Four we believe we have a meaningful opportunity to expand and capitalize on the strategic advantage. These.

<unk> are amongst our highest rated guest experiences today.

And we have plans to lean into these assets even further.

Well historically, the marketing of our own assets have really focused on the ships, we have untapped potential to create demand for these amazing destination experiences.

I have never been more excited about these prospects as we begin to unfold. This multi year strategy with the opening of celebration key in just about six months.

This will be by far our largest and most carnival centric destination in our portfolio with five awesome portals built for fun.

Family friendly to exclusive Beach club experiences not only well celebration key be the closest destination in our portfolio saving fuel costs and reducing greenhouse gas emissions. The only way you can get to a celebration key is not one of our cruises.

Moreover, we just recently announced the change that signals more about the shift in our destination asset strategy half Moon Cay, the highly rated and award winning exclusive Bahamian destination known for beautiful beaches, and Crystal clear waters is being renamed relax away.

Half Moon Cay to better reflect the experience guests can expect as they are immersed in this tropical Paradise enhancements will include an expanded beachfront experience lunch venues a variety of bars and other features created with intentionality to reinforce this.

<unk> natural beauty and pristine appeal.

[noise] ready in summer of 2026.

Newly constructed peer on the north side will allow two ships to dock, including carnivals XL class ships that will be able to visit the private island for the first time.

We'll be positioning these jewels of the Caribbean with consumers in a way that will encourage guests to actively seek out. These specific destinations offered exclusively by our brands and many of Carnival cruise lines itineraries will feature both relax away half Moon Cay.

And celebration key providing guests with complementary experiences enjoying both the idyllic Andy Ultimate Beach days.

We believe developing and promoting these unique assets will help us cast the net wider and capture even more new to cruise demand were already in flight with preparation for branding and marketing campaigns for these amazing destinations with more to come in the future.

As it is for 2025, we expect to hit our 2026 EBITDA per a L. B D target a full year early while raising Rois C to just shy of our 12% 2026 target.

So considering all of the progress we've made without this in place. It's clear we have a tremendous amount of headroom remaining to create more demand to cultivate more guest loyalty and capture more pricing for the incredible ship and shore side experiences we provide our guests.

At the same time, we're making meaningful progress on the sustainability front.

We achieved about 17, and a 5% reduction in greenhouse gas emissions intensity versus 2019 on track to achieve our target of 20% by the end of 2026. Our goal that was previously pulled forward by four years improve.

Improvement Hasnt just been in emission intensity levels. Despite.

Despite the fact that we're over 9% larger than we were in 2019, we've actually lowered our absolute greenhouse gas emissions by almost 10% over this time.

And of course, we're also making huge strides in rebuilding our financial fortress.

In under two years, we've paid down over $8 billion of debt off our peak and significantly reduced interest expense, which coupled with our improving EBITDA has improved our leverage metrics tremendously.

Our current 2025 guidance will put us at 3.8 times net debt to EBITDA closing in on our expectation to reach investment grade leverage metrics in 2026.

Again thank.

Thank you so much to each of our team members, who have delivered a step change improvement in 'twenty 'twenty, four and set us up for a fantastic 2025 and beyond.

And as has always been the case and always will be thank you. So much to our travel agent partners, who have contributed immensely to this success. We also appreciate the support we've received from our loyal guests investors destination partners and other stakeholders.

Let's not forget that.

These efforts were really all about the main thing.

David: Livery unforgettable happiness to over 13, and a half million people in 2024 by providing them with extraordinary cruise vacations, while honoring the integrity of every ocean. We sell place we visit and life, we touch with that I'll turn the call over to David.

David: Thank you Josh I'll start today with a summary of our 2020 for fourth quarter results.

David: Next I will provide an update on our refinancing and deleveraging efforts.

David: Then I'll finish up with some color on our 2025 full year December guidance.

David: Let's turn to the summary of our fourth quarter results.

David: Net income exceeded September guidance by $126 million as we outperformed once again, the outperformance was essentially driven by three things.

David: First favorability in revenue were at $77 million as yields came in up six 7% compared to the prior year. This was 1.7 points better than September guidance, driven by close in strength in ticket prices as well as strong onboard spending.

David: Second cruise costs without fuel per available lower birthday, or a L E D.

David: Seven 4% compared to the prior year. This was six tenths of a point better than September guidance, which was worth $13 million and third favorability in interest expense other income and expense and tax expense all of which were partially offset by <unk>.

Higher fuel prices.

David: Got it to a 38 million dollar improvement.

David: Premiums for the fourth quarter improved over 5% versus the prior year, which I would remind you we're up over 10% last year with improvements on both sides of the Atlantic driven by higher ticket prices and improved onboard spending.

David: Strong demand allowed us to once again report records delivering fourth quarter record revenues record yields record per Dms record adjusted EBITDA and record customer deposits.

Next I will provide an update about refinancing and deleveraging efforts.

David: Our full year 2020 for yield improvement of 11% was over three times or 3.5% cost increase.

David: This drove improved margins and cash flow, which resulted in a strong EBITDA of $6 1 billion in cash from operations of about 6 billion.

All of this propelled us on their journey to pay down debt and proactively manage our debt profile.

David: During 2024, we made debt payments of over $5 billion, which included Opportunistically prepaying over 3 billion of debt bridge.

David: Juicing secured debt route.

David: Moving the secured second lien layer from our capital structure.

David: Paying off some of them more expensive debt.

David: We ended 2024 with 27 and a half billion of debt over 8 billion cost the January 2023 peak a.

David: Our leverage metrics continue to improve in 2024, as our EBITDAX continue to grow and our debt levels continued to shrink.

David: We achieved a 4.3 times net debt to EBITDA ratio nearly a two and a half turn improvement from 2023 positioning US reports the way down the path to investment grade leverage metrics in just one year.

David: With demand up there that well manage near term maturity towers and improved leverage metrics, we expect to opportunistically capitalize on improved interest rates, while proactively managing our maturity towers for 2027 M beyond with various refinancings.

Now I'll finish up with some color on our 2025 full year December guidance.

David: On top of 2024 is 11% yield growth, we are expecting to deliver a strong 2025 yield improvement with our guidance forecasting an increase of approximately 4.2% worth over 60 cents per share when compared to 2024.

David: The strong improvement in 2025 yields as a result of an increase in higher ticket prices higher onboard spending and to a lesser degree higher occupancy with all three components improving on both sides of the Atlantic.

David: We are well positioned to drive 20, twenty-five ticket pricing higher which significantly less inventory remaining to sell than the same time last year.

David: Now turning to costs.

David: Cruise costs without fuel per a L. B D is expected to be up approximately three 7% costing 28 cents per share for 2025 versus 2024.

David: We are looking forward to the introduction of our game changing exclusive Bahamian destination celebration K in July 2025.

David: We anticipate that celebration K will be a smash hit with our guests and provide an excellent return on our investment.

David: However, operating expenses for the destination will impact our overall year over year cost comparisons by about half a point.

David: In 2025, we are expecting 687, Drydock days, an increase of 17% versus 'twenty 'twenty, four which will also impact our overall year over year cost comparison by about three quarters of a point.

David: In 2024, there were several onetime items that we benefited from impacting our overall year over year cost comparisons by about a quarter of a point.

David: The remaining 2.2 point increase in cruise costs are driven by inflation and higher advertising expense, partially offset by efficiency initiatives and further leveraging our industry leading scale.

David: An increase in depreciation expense and lower interest income is partially offset by an improvement in interest expense from our refinancing and deleveraging efforts for a net impact of four cents per share.

David: The net impact of fuel pricing currency is expected to favorably impact 2020 high by approximately four cents per share with fuel prices favorable by approximately nine cents per share while the change in foreign currency exchange rate goes together way by five cents per share.

David: Yeah.

David: Let's not forget that the European Union allowance or EUA regulation in 2025 increases to 70% of carbon emissions from 40% in 2024.

David: As a result, we would expect the impact of higher EUA costs on a year over year fuel expense to be about three cents per share.

David: In summary.

David: All these factors together, our net income guidance for full year 2025 is over $2 3 billion, an improvement of more than 400 million versus 2024 or 28 cents per share.

David: Robust demand for our brands and continued operational execution is driving our strong financial results along with our increased confidence in achieving investment grade leverage metrics. During the next couple of years as we move further down the road rebuilding our financial fortress.

While continuing the process of transferring value from debt holders back to shareholders.

David: Now operator, let's open the call for questions.

Speaker Change: Certainly what I'll be conducting a question and answer session.

Speaker Change: It can be placed in the question queue. Please press star one on your telephone keypad.

Speaker Change: Information tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue and as a reminder, please ask one question one follow up then return to the queue.

Speaker Change: Our first question today is coming from Matthew boss from JP Morgan. Your line is now live.

Matthew Boss: Great Thanks, and congrats on another great quarter.

Speaker Change: Thank you very much Matt.

Speaker Change: Josh could you elaborate on the foundation that you've laid over the last two years. What you think is positioned you and the company to capitalize on the current demand that youre seeing and with twenty-five shaping up to be another banner year could you speak to initiatives across the organization to take share optimize yields in and drive onboard spending and in 25 in <unk>.

Speaker Change: <unk>.

Speaker Change: Yeah. Thanks, Thanks for the question Matt.

Matthew Boss: I guess, if we look back at the last two years.

Matthew Boss: Probably the biggest thing was was just doing a bit of restructuring as we've talked about in the past and getting the right leaders in place leading leading the brands and those leaders are a fantastic group of people leading fantastic brands.

Matthew Boss: On the call.

Matthew Boss: On the commercial focus side, which we've been talking about for the last few years right. It is it is scrutiny and expectations around how we are improving in the revenue management space in the marketing space consideration set top of funnel stuff all the way down to closing the bookings.

Matthew Boss: The amount of advertising that we've ramped up really just to get us closer to where the rest of the market is I think is helping to pay to pay dividends.

Everything from making sure our brands have great relationships with the trade to investing in our own capabilities.

Probably the last thing about the foundation would be.

Matthew Boss: The portfolio management, we've been actively managing the portfolio and.

Matthew Boss: Allocating shifts differently moving vessels winding up a brand in the case of PNR Australia.

Matthew Boss: Setting ourselves up to really put the assets, where the highest returns are in the immediate term intermediate term, while we help all of the brands, who aren't yet where I think they should be.

Matthew Boss: Get to those levels so.

Matthew Boss: With respect to 2025 and what are the things that we've got that are going to continue our progress.

Matthew Boss: At a base level, it's a continuation of all of those things in the commercial space and having those great brand leaders really lean in even further we're investing in our people we are investing in our tools our revenue management tools to make sure that we are utilizing the technology effectively.

Matthew Boss: To optimize the yields the destination strategy that you've already heard in the prepared remarks, I think that's going to be a tailwind that continues for a really long time, and we're really looking forward to that as far as the Ob are onboard spending.

Got runway there I mean, we've got a good amount of runway to continue the progress we've been making around pulling forward the spend which as everybody knows opens up the second wallet and the more people spend before they get on the cruise or more of the spend on the cruise.

Matthew Boss: So our brands are again working hard to continue that and we're nowhere near what the cap could be on those type of effort. So.

Matthew Boss: I'm pretty enthusiastic as you could probably tell.

Speaker Change: I can tell I can tell and then David maybe just quick if you could just break down net cruise cost ex fuel components in that $3 seven for this year, but I think more so how best to think about maybe a reasonable spread between yields and cruise costs multiyear if there's maybe a back of the envelope rule of thumb multiyear yes.

Speaker Change: So I I did in my mind notes talk about the three seven because yeah. Just briefly at the expenses relating to celebration key were a half a point.

Speaker Change: The increase in dry dock days was three quarters of a point I also say about a quarter of a point was the.

Speaker Change: One time items that we benefited from in 2024, and then the remaining 2.2 points really was a combination.

Speaker Change: Inflation and higher advertising that Josh mentioned.

Speaker Change: Partially offset by efficiency initiatives and other leveraging our scale throughout the company. So those are really the four key components that make up the three seven.

As far as the difference you know I don't think there's any rule of thumb here I really do believe we can.

Speaker Change: Can you as you saw.

Speaker Change: 'twenty 'twenty four it was three times, but that was a recovery story or.

Speaker Change: Our guidance has a half a point difference between the yield improvement.

Speaker Change: And our cost improvement and keep in mind that a point of yield is worth almost double what our point of cost is.

So there is leverage there.

Speaker Change: But we will work hard to continue to maintain our cost consciousness and as Josh talked about.

Speaker Change: The things, we're investing in advertising and revenue management should help drive yields higher over time as well as the destination strategy. So we do expect to see a continued improvement in margins.

Speaker Change: Great color best of luck.

Speaker Change: Thank you next question is coming from Ben Chaiken from Mizuho Securities. Your line is that a lot.

Ben Chaiken: Hey, Thanks for taking my questions celebration key looks pretty exciting opening up later this summer or do you think you are in the customer awareness of this product or do you think it's well understood and appreciated by customers or is it still or is that marketing kind of like and then an awareness still ramping and then I have one follow up. Thanks, alright. Thanks, Thanks, Matt definitely still still ramping I mean, it doesn't exist yet.

Ben Chaiken: So we are definitely building momentum there we're building excitement we're getting.

The response that we expected with respect to how the bookings are shaping up which is good to see but it's still early days I think.

Ben Chaiken: The really exciting part is once were once we're in there are really operating and having guests enjoy these experiences in optimizing what we do and how we do it.

It takes off from there because right now to make belief. So we've got a we've got to let everything.

Ben Chaiken: Get in place and then I think that will help tremendously.

Ben Chaiken: Got it understood and then and then in the release and call.

Ben Chaiken:

Ben Chaiken: Transcript you referenced an enhanced destination strategy can.

Can we open this up a little bit does this refer to celebration key or just a little bit of a teaser to an additional traditional opportunities to provide guests with differentiated you know carnival owned operated destination. I know you mentioned appear at half Moon Cay I believe I'm, just trying to understand the magnitude and direction of the strategy.

Ben Chaiken: Let's take a step back from any one particular destination I think.

Ben Chaiken: <unk> for a long time now for several years and I think some are doing better than others and better than us is turning their own destinations into something that not only guests, but non cruisers look at and decide that's going to help tilt my vacation decision to take a cruise because the destination itself looks amazing.

Ben Chaiken: <unk> is an amazing experience and I can only do it on occurs.

Ben Chaiken: We have not historically I think done a good enough job in raising the level of awareness on the amazing destinations that we have and that are in the pipeline.

Ben Chaiken: When it comes to celebration key we're getting a head start because were doing it before the the location exists when you think about the change to relax away for half Moon Cay.

It is beautiful it is one of the most stunning destinations in the world and yet if you're not a cruiser you don't know anything about it you're not looking for it and.

Ben Chaiken: And we're going to change that dynamic and with relax away. What we're trying to convey to people who don't cruise is is really the the five of the experience that they can get and the great thing about it is we're leaning into that natural beauty, which is going to be different from celebration cake celebration key as we said that is the ultimate Beach day right.

That's a way is all about the idea that it's being in a tropical paradise, and we're gonna be able to marry those two things together. So people on the same crews will be able to get both experiences that are very very different and exclusive to us and so we're going to raise our game there and there's more things that we can do without heavy investment with some of the destinations that we own.

Ben Chaiken: Make that part of that more exclusive collection. So early days, but we're pretty excited about it.

Ben Chaiken: Very helpful. Thanks.

Speaker Change: Thank you next question is coming from slippers and ski from Stifel. Your line is now live.

Speaker Change: Yeah, Hey, guys good morning happy.

Speaker Change: Happy holidays to tell you guys.

Speaker Change: So Josh or David if we think about the yield guidance for for 2025.

Speaker Change: Just based on the fact that Europe, two thirds booked already for next year.

Speaker Change: Seems like you have strong pricing momentum across pretty much all your geographies.

Speaker Change: No you'll hate that I'll say this but it seems like the 4% or approximately 4% yield guidance do you have to us might end up being conservative.

Speaker Change: When we have the same call a year from now so I guess the question is can you give us a little color around the makeup of that yield forecast and maybe does it seems like you could be taking a conservative view around.

Whether it's onboard trends, whether it's the close in pricing opportunity.

Speaker Change: And if I ask that question another way I mean, if we think about the your initial yield guidance last year, which I think was eight 5% and it ended up.

Speaker Change: Ended up closer to about 11% what did you guys underestimate for for 2024.

Speaker Change: Well first of all we were a little worried you weren't first in the queue. So we're going to literally calling on them and wanted to make sure. You were you were okay.

Glad to hear your voice.

Speaker Change: Good good good.

Look our goal is to give guidance based on what we know.

Speaker Change: And it's certainly something that we want to meet and obviously work hard to exceed.

Speaker Change: Last year I meant what I said in my prepared remarks, I think it was a fantastic year by the whole team that outperformance was I.

Speaker Change: I would argue was pretty pretty special.

Also argue that 250 basis points of yield on top of a base of two of eight 5%.

Speaker Change: Proportionally as is.

Speaker Change: Two 5% on top of four 2%.

Speaker Change: So we have a very good handle I think on where we are today much more so than last year, even because we're already back up and full already at the full occupancy percentage more or less and we always get and if you remember the first half of the year, we're still in catch up which is about five points of our improvement in yields last year was.

Speaker Change: Occupancy so I think we're in a more stable place than we were.

Speaker Change: Well the onboard spend have been fantastic, there's no doubt about it and we're working hard to continue that trend and when you look at the four 2%.

Speaker Change: There is a little bit for occupancy, but it's all price right outside of a little bit of occupancy its price and it is a combination of the ticket side and the onboard spud continuing and we'll work hard to optimize as much as we can I promise you. Our goal is the same as yours, which is get as much revenue as we can.

Josh: Okay. That's good color and then Josh if we look at slide.

Josh: Slide 17.

You know about sea change you noted your EBITDA per L. B D. It's going to be hopefully achieved in 2025, but if we look at your ROIC targets, we look at the even the carbon reduction target I mean, it's almost like youre going to hit those potentially hit those as well next year. So.

Josh: I guess the question is do you see.

Josh: And I know you're going to hate this but do you start to think about laying out another.

Josh: Set of long range financial targets at some point.

To us it seems like the sea change targets really were important pillars and gave the investment community is something to really rally behind so I'm, just trying to get a little bit more color as to how youre thinking about the long term opportunities here, yes look when we get there I can I can tell you that whether we whether we do it on the same day or whether it.

Josh: We wait a quarter to catch our breath I can promise you I like the concept of longer term targets that we set for ourselves and we set for our investors. So you can understand what we think our trajectory should be and I can motivate my team internally to rally around what I think we should be expecting of ourselves. So yes, you can expect that to happen.

Josh: When when we get there.

Josh: I would love nothing more to get to where we were.

Josh: Where would you say, we're going to be in 2000 2060 change targets early.

Josh: We need about 100 million Bucks.

Josh: Operating income to get to the ROIC see carbon it'll be harder we have a pretty good.

Josh: Understanding of where we are but.

Josh: Getting to 19%.

Josh: It's pretty good and let's see what happens.

Josh: Okay Gotcha.

Josh: Real quick housekeeping wise, David is there anything we should think about in terms of cadence of costs. Obviously, we've got the first quarter NCC guide, but anything else through the rest of the year, we should think about.

Josh: So as you can imagine is tough in terms of season realization between quarters, but the guidance that we gave you is that in the second quarter. We do expect higher dry dock days, so I wouldn't be surprised if the second and third quarter, where call. It one and a half to two points above the full year average in the fourth quarter.

Josh: There is lower.

Josh: That's about the best initial guidance I can give you.

But we too will probably see some changes because.

Josh: This guidance presumes, we've made every decision on all advertising and everything else between the quarters. So just take it as a forecast okay. Thanks, guys happy holidays.

Speaker Change: Thank you. The next question is coming from Robin Farley from UBS. Your line is my life.

Great. Thank you, obviously, a fantastic guidance here.

Speaker Change: And there was unexpected I did want to ask about two things just to get a feel for whether these things are in your guidance or how much they're in your guidance and whether this would be additional upside.

Speaker Change: The first is celebration key you mentioned, obviously you expect it to be very successful and a driver, but you're not really able to see at this point, what I would add really to ticket price or onboard spend so I'm. Just wondering if you could help us understand how much you really how little you may have in your yield guidance today for for celebration key I know in your crew.

Cost guidance is that 50 basis points.

Much is there.

Speaker Change: In your yield guidance at the moment. Thanks, Yeah. Thanks Robyn.

Speaker Change: So it is in our guidance, but I'll give you some magnitude of just what touches celebration this year and it's only 5% of our total sailings in 2025, so it's not that much when we get to 2026 somewhere around kind of a full year run rate basis, you're talking about 15% plus so so there'll be more.

Speaker Change: <unk> meaningful for the company overall.

Speaker Change: Nonetheless, I'm not going to say what it is but we're happy to say that when we look at our bookings in the fourth quarter for Carnival. We are seeing the premium that we expect it to see which is good news.

Speaker Change: Okay, great. Thank you and then also in your EPS guidance.

Speaker Change: I think that you'll have 3 billion in debt. That's callable next year I hope I'm getting this number right, but it is and I assume that youre not factoring in the lower interest costs from some of that very expensive debt that were redone at maybe what some other things. This year has been done that could that be 20, or 25 cents of sort of.

Speaker Change: Upside in annual.

Speaker Change: The interest expense savings is that kind of a ballpark to think about potential upside.

So 'twenty to 'twenty, five 'twenty would be $280 million because its 14 cents per penny. So just keep that in mind I'm not sure. What what you were thinking of I will say that there is opportunity on the refinancings.

Speaker Change: We do expect to address those two.

Speaker Change: Double digit interest rate debts that you're referring to they're both callable as you said in the first half of the year there will be some additional savings we do it we will look at that throughout the year. We did include just a bit of saving interest savings in our forecast, but because we're not sure what the market will bring in terms of interest rates too.

Speaker Change: For us.

So there is hopefully we will have a number of successful transactions this year, which will provide some upside for I should say some lower interest expense.

Speaker Change: Okay, great. Thank you very much thanks.

Rob: Thanks, Rob.

Thank you. Your next question is coming from James Hardiman from Citi. Your line is now live.

Rob: Yeah.

James Hardiman: Hey, good morning.

James Hardiman: So I wanted to ask maybe a big picture question, obviously, not a whole lot of capacity being added here and so so much of this growth.

James Hardiman: Growth story is is.

James Hardiman: It's organic obviously.

James Hardiman: So I guess my first question is how much of that organic turnaround.

James Hardiman: Think it's a function of of sort of factors taking place in the industry versus I don't know self help right. You've listed obviously, a whole bunch of things that youre doing brand by brand.

James Hardiman: I'm ultimately trying to figure out sort of the sustainability of this organic growth that we're seeing right now.

James Hardiman: Yes, Hey, James How're you doing.

James Hardiman: I wish I could tell you with the scientific answer to your question is about the industry overall versus US I think I think the industry being more mainstream along with US is certainly a fantastic thing for everybody and I don't want to discount that but.

James Hardiman: I meant what I said about same ship sales.

James Hardiman: We got almost 10% yields.

James Hardiman: On same ship and.

James Hardiman: Yes.

James Hardiman: If you look at our history, our historic growth rates on revenue are significantly lower than our crews competitor set.

And when you look I don't know what theyre going to do next year, but when you look at this year.

James Hardiman: We're right in the mix and at the top so.

James Hardiman: I feel very good that our trajectory is changing for us versus what we had been accustomed to and it means we've got a pretty good amount of headroom as we look forward because people should be paying more for our experiences.

James Hardiman: Not only vis vis our crews competitors, but I'm talking about vis vis the experience gap.

No.

James Hardiman: That exists on what we do versus what land offers what we call the price to experience ratio is just remarkably skewed.

James Hardiman: We should be getting a lot more versus what competitors do it I think it's probably a pretty good sign.

That I'm right about that and the potential where do you think about Disney.

James Hardiman: Basically, saying, we're going to underinvest in things that we have in the past, but we're going to double down on crews they see the value of that as well. So I think we're in good company and we've got a lot of self help along the way.

James Hardiman: Got it and then.

James Hardiman: I guess, along those same lines, although I guess in a lot of ways I'm asking for previous question in a different way but.

James Hardiman: You finished 24 per Dms up north of 5%.

James Hardiman: The guidance for the year because yield guidance is for two theres some occupancy in there.

James Hardiman: And then you know first quarter is $4 six that we're going five plus 462.

James Hardiman: Lower.

James Hardiman: I guess from our perspective, right celebration key which comes on in the back half should should actually help with some acceleration.

Speaker Change: Is there anything quantifiable.

Speaker Change: That we should be thinking about that would weigh on per Dms as we work our way through the year, maybe an itinerary geographical mix issue or is this just you know you get some version of this question every quarter right is this just sort of concern.

Speaker Change: The further out you look.

Speaker Change: Uh huh.

I got it.

Speaker Change: Same answers that we've been giving right we're trying to be transparent.

Speaker Change: Apparent as we can be with our with everyone on the call and everyone who's not on the call. We havent been through wave yet we will although although it's been a remarkable ride for two years it feels like wave hasn't stopped since <unk>.

Speaker Change: Summer of 2022.

Speaker Change: But we haven't been there yet and so we'll see what that brings us and and we'll talk again in March.

Speaker Change: Got it I appreciate it.

Speaker Change: Thank you. Your next question is coming from Patrick Schultz from Truest through letters that life.

Speaker Change: Patrick perhaps your phone is on mute.

Speaker Change: Yeah.

Hi, Good morning can you hear me go ahead Patrick.

Speaker Change: Great. Thank you.

Speaker Change: To ask a little bit about Mexico for my first question.

Speaker Change: News out there lately.

Speaker Change: Regarding additional passenger charges on that.

Speaker Change: Do you just you think Dod deal.

Speaker Change: Or is there any chance that that may not go through at this point and then.

Speaker Change: Quickly for your folks for your.

Speaker Change: For your ship what percentage of your.

Speaker Change: Itineraries do make a stop at.

Speaker Change: Report in Mexico. That's my first question. Thank you.

Speaker Change: Yep.

Speaker Change: So right off the bat no I do not think it is a done deal.

Speaker Change: What we have.

Speaker Change: <unk>.

Speaker Change: Dealing with this with the folks in Mexico for the last few weeks, we were not consulted.

Speaker Change: No. One was consulted witness was passed it was pretty it's pretty clear to me I have a lot of respect for the president and what she is doing.

Speaker Change: But she was misinformed not informed and and no one of them is thinking through the ramifications of what they were suggesting and Theres a reason why cruises in transit historically.

As opposed to people, who fly into Mexico and stay there for several days. So it's already been pushed off the July 1st we're not satisfied with that we want to have good dialogue with the government and explain all the benefits that we bring to Mexico, which are significant and it doesn't take much.

Speaker Change: To tweak itineraries to effectively erase would be.

Speaker Change: Proposed tax is on the industry and so I feel.

Speaker Change: We are engaged in those conversations we hope to have more after after the new year, but it's definitely not settled and we have nothing in the forecast.

For these changes for the for the tax just so everybody knows.

Speaker Change: For the year as far as as.

Speaker Change: As far as what what the impact would be.

Speaker Change: For 2000 2025, assuming it did go into place and we made no changes.

Speaker Change: Starting in July.

Speaker Change: 2025 is less than 5% of our itineraries.

Speaker Change: For the year.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Certainly.

Speaker Change: It's a fluid situation and then a follow up question.

Speaker Change: Is on the.

Speaker Change: Year over year growth rate in your passenger ticket revenues versus year over year growth rate in your commissions transportation and other.

Speaker Change: The past several quarters those growth rates sort of moved in.

Speaker Change: In line or lockstep. This most recent quarter you did have a noticeable.

The increase in passenger ticket revenue percentages higher than.

Speaker Change: The Commission paid out you know are you starting to.

Speaker Change: See more book direct or anything to read it.

Speaker Change: Thank you.

Speaker Change: Patrick.

Speaker Change: We should talk after the call I thought it was pretty close.

Speaker Change: Tenths of a percent or something very close oh, okay.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: A little bit difficult, we'll talk we'll talk about that after.

Cobalt, but anything anything else to two.

Speaker Change: Nothing to.

Speaker Change: Consider the numbers as you know do vary a little bit from quarter to quarter because of currency and the amount of them.

Air Sea mix that we have but nothing significant and otherwise.

Speaker Change: Okay. Thank you for the clarification.

Speaker Change: Thanks, Patrick.

Speaker Change: Thank you. Your next question today is coming from David Katz from Jefferies. Your line is now live.

David Katz: Hi afternoon covered thank you for taking my question covered a lot already I wanted to get a sense for the cost side of the equation right.

The variability within there right the degree to which you know and what would have to happen for you to turn out a little bit better.

David Katz: On the cost increases that you may have built into your guidance.

David Katz: And then I have a quick follow up.

David Katz: Yes, so the.

David Katz: If we're talking about the full year.

David Katz: And the three 7%.

You know that.

David Katz: Thing that is likely to change over time.

<unk> is most likely to be the efficiencies we find in the magnitude of those efficiencies.

David Katz: We are constantly working hard we have lots of ideas out there. It is always very difficult to figure out the.

David Katz: The exact timing and we did build quite a bit into our guidance and into our forecast.

David Katz: But we continue to work hard to improve on those and so last year, we were able to exceed our expectations, where and we'll work hard to try to do better this year, but it's very hard on the timing of all these items.

David Katz: Plus we built in inflation, something a little bit less than 3% and trying.

David Katz: To get that number perfect I mean, if you know absolutely in every category what inflation will be in 2025, let me now because we did the best we could but im sure.

David Katz: Some of those pieces are going to be off as I always say, there's only one thing I know about every forecast it's wrong I, just don't know by how much and in what direction.

Well said I wanted to follow up just on the leverage side of things when I look back historically.

David Katz: At where the company has operated.

Obviously, making good progress today, but should we be thinking about the two times or better.

David Katz: As a long term aspirational target is that still achievable.

David Katz: Uh huh.

Speaker Change: I'm proud of former treasurer of the company.

Speaker Change: It's not a target we have for ourselves right now our target right now is get to investment grade metrics, which is at the three five times, how strong we want to rebuild that fortress.

Speaker Change: That's still up for.

Speaker Change: Thats up for a decision do we need to be.

Speaker Change: And AA minus rated company again bordering on a which is some of the some of the situations. We found ourselves in and I could argue no we don't need to.

Speaker Change: Do we want to be a solid investment grade absolutely so as we get closer to <unk>.

Speaker Change: Closer to that metric, we're obviously going to be having conversations with our board to really set out what we think the right balances between that balance sheet strength investing in ourselves investing in our in our shareholder returns via dividends or buybacks.

Speaker Change: To be seen.

With the formal being wet but that all goes into the mix, but I would say nobody should be thinking about a two time theres a target we're setting for ourselves.

Speaker Change: Thank you very much I appreciate it yeah, but.

Speaker Change: Thank you. Your next question today is coming from Jamie Katz from Morgan Stanley I'm, sorry from Morningstar. Your line is that life.

Jamie Katz: Hey, good morning, Thank you for taking my questions.

Jamie Katz: First I'm, hoping that you guys can talk a little bit about one waiver season, I guess I'm trying to understand how to think about balancing.

The rest of 2025 with pulling forward more demand from 2026, and whether or not one is.

Jamie Katz: A better strategy than the other without giving too much competitive information away.

Jamie Katz: There are way too I guess.

Jamie Katz: Bundle, even less than you are bundling now and and you know maybe promote lasse <unk>.

Jamie Katz: In order to optimize pricing thanks.

Jamie Katz: Yeah. Thanks so.

Jamie Katz: It's a little bit of a hard question to answer we are actively and have been actively selling 2025 and 2026 for some time as you as you might have picked up in the prepared remarks, we actually just set a record.

Jamie Katz: This past quarter for booking activity for the further year out. So 2026 in this case. So I think our brands are actually when it comes to revenue management and optimizing the shape of the curve they're.

Jamie Katz: They're doing a pretty solid job across the board, which doesn't mean, there's not a lot of room for improvement, but a pretty solid job so everyone's hitting.

Jamie Katz: Wave.

Jamie Katz: In slightly different positions with respect to how much they are booked for 2025 quarters.

Jamie Katz: Quarters, So I'd say, it's a case by case decision about how theyre going to be tackling wave I would say everybody does promotions and wave.

It's how you get people interested in incursion. During this critical period, but I would remind you we did promotions last year and where we ended up with 11% yields.

Jamie Katz: So so the promotional.

Tactics and tools that we use are they're healthy.

Jamie Katz: And they are part of the process that we go through.

Jamie Katz: Yeah.

Jamie Katz: And then the other question I have is a little bit of a law.

Jamie Katz: Term strategic question right, we know what the costs are affiliated with them.

Jamie Katz: Celebration key this summer but.

Jamie Katz: I suspect that this isn't a one and one and done project. So is there some non new build capex, we should be thinking of like level that will be in the years.

Jamie Katz: In these brand building projects longer term that might be higher than it was in the past.

Jamie Katz: That's a fair question I think if you think about the things that we've been investing outside of outside of the Newbuild celebration kidneys appear half Moon Cay.

Jamie Katz: How EDA evolutions, right, which is their mid ship refurbishment plan and Aida is.

Jamie Katz: There's much to carnival chagrin, Aida is pretty much neck in neck with carnival for highest returning brands in our portfolio, we're making the right investments and non newbuild to continue the momentum that we have as far as what the ultimate level is on a run rate basis goes.

Jamie Katz: We don't I don't have a number for you that that I'd stick to that says over the next six years or seven years. This is what you should expect but clearly we're making these investments on the basis that they're going to support the improved returns that we demand of ourselves.

Jamie Katz: So it's about 600 million for celebration key as we've talked about it's another few hundred million for what we're doing at relax away half Moon Cay.

Jamie Katz: And I eat evolution for any one particular ship that theyre going through this process, you're talking about tens of millions, but we think it's tens of millions. It really is going to be a boost for a brand that is incredibly high return and so on.

Jamie Katz: David if you want to add any more color yeah. The only thing I'd say is I mean, you're so you saw in the press release, what our number was for 2025.

Jamie Katz: In all likelihood, it's going to be something similar to that going forward, but it's hard to say exactly what it will be every single year, because there's so many bigger decisions that we'll be making over time.

Which will make up that number.

Jamie Katz: One thing I would say about the destination site celebration key.

Jamie Katz: When care, a little bit unique in scope and size of what we're doing.

Jamie Katz: The other destinations we have in our footprint there are amazing and we will spend some money over time to do some things that make the experience better and better opportunity for us to generate returns, but I don't see other than maybe a continued expansion of celebration key as we've already been talking about through the end of this decade.

Jamie Katz: Not sure I see on the horizon or anything.

Jamie Katz: I would flag for you right now is kind of out of the blue.

Jamie Katz: That would be talking about in six months earlier.

Great. Thank you.

Jamie Katz: [noise] last day.

Jamie Katz: Next question.

Jamie Katz: Go ahead I'm sorry.

Yes, let's just take one more question where appropriate.

Speaker Change: Sure thing our final question today is coming from Brett I'm on tour from Barclays. Your line is that right.

Brett: Good morning, everybody. Thanks for taking my question and congratulations on the results today.

Speaker Change: So the first question.

Speaker Change: Welcome to my first question is on the booking curve, Josh and I don't know if this is an easy one to answer but when you. When you can try and take the forecasting out of it and you're just focusing on your booking curve today versus the way or versus how you're booking your bookings looked at the same time last year.

Does the pricing look any less robust than this time last year, perhaps tougher comps or anything else that you would highlight.

Speaker Change: Well I mean, it's certainly tougher comps this year than it was last year.

Speaker Change: Our brands are.

As I've said, though.

Speaker Change: Paired remarks.

Speaker Change: We're basically at a higher occupancy at a higher price point and that's across all four quarters.

Speaker Change: I think the brands are doing a good job of continuing the momentum and optimizing.

Speaker Change: Optimizing that.

Speaker Change: That curve so it probably doesn't answer the question the way you'd like it to but.

Speaker Change: We'll see where that where that shakes out we gave you our our view of yields as of now.

Speaker Change: Date, you is there's things to update.

Okay, great. Thanks, and then just a quick housekeeping the Red Sea had a something like a $130 million impact last year, how much of that.

Speaker Change: Secondly, do you get back in 'twenty, five and sort of how should we think about the timing of it and and and and the cadence and where it would kind of show up in the comps.

Speaker Change: So I think what it all shake out it was probably a little less than $100 million at the end of the day as we did our analysis for 2024 I think the thing about year over year for 25 that people need to keep in mind, it's not a huge spring back and the reason why is if you think about this time last year, we had already sold.

Speaker Change: Our world cruises people were already on them.

Speaker Change: Before the Red Sea became a thing.

Speaker Change: We had to scramble we did everything we had to do a cost of $90 million. This year. We're in a different place, which is we knowingly took <unk> out of the equation back in <unk>.

Speaker Change: Buri March for 2025, which meant we had to sell cruises.

Speaker Change: Arent necessarily as attractive to sell because you can't go through the Red Sea.

Speaker Change: And so from a year over year, it's a different kind of pinpoint that we had to deal with.

Speaker Change: We've dealt with and it's in our numbers.

Speaker Change: But it means that you'd love to see us kind of this bounce back and we're hopeful that we can go forward I don't think 25 versus 24 is really the year that we'll see that the normalization is now and so 26 versus 25 will be on an apples to apples basis.

It's a lower yields offsetting no disruption the shaft bottom more or less in high level. Yeah. That's fair. Okay. Alright, Congrats again guys. Thanks, Thanks very much grant okay. So with that I think we're over time, so I would say happy.

Speaker Change: Happy holidays, and wishing everybody on the call nothing but good.

Speaker Change: Good health and happiness in 2025, thanks very much for joining.

Speaker Change: Thank you that does conclude today's teleconference. You may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Greetings and welcome to the Carnival Corporation and plc fourth quarter 2024 earnings Conference call. At this time, all participants are in a listen only mode.

Speaker Change: If anyone should require operator assistance. Please press star zero on your telephone keypad.

Speaker Change: A question and answer session will follow the formal presentation.

Speaker Change: You may be places the question shoot anytime by pressing star one on your telephone keypad.

Speaker Change: We ask you please limit yourself to one question and one follow up then return to the queue.

As a reminder, this conference is being recorded.

Speaker Change: It's now my pleasure to turn the call over to Beth Roberts Senior Vice President of Investor Relations. Please go ahead Beth. Thank you good morning, and welcome to our fourth quarter 2024 earnings Conference call I'm joined today by our CEO, Josh Weinstein, our Chief Financial Officer, and David Bernstein, and our chair Micky Arison.

Speaker Change: We begin please note that some of our remarks on this call will be forward looking therefore, I will refer you to the forward looking statement in today's press release.

Speaker Change: All references to ticket prices net premiums net yields an adjusted cruise costs without fuel will be in constant currency unless otherwise stated references to podiums in yields will be on a net basis. Our comments may also reference cruise costs without fuel EBITDA net income and free cash flow and ROIC.

Speaker Change: All of which will be on an adjusted basis unless otherwise stated all these references are non-GAAP financial measures defined in our earnings press release, a reconciliation to the most directly comparable U S. GAAP financial measures and other associated disclosures are also contained in our earnings press release and in our Investor presentation. Please vis.

Josh Weinstein: At our corporate website, where our earnings press release and Investor presentation can be found with that I'd like to turn the call over to Josh.

Josh Weinstein: Thanks, Bob.

Josh Weinstein: We had a strong finish to an incredibly strong year and right off the bat I'd like to thank the efforts of our hardworking and dedicated team the best in all of travel and leisure. They have delivered results that consistently outperformed even my own high expectations are global.

Leo is clearly firing on all cylinders and I'm very proud of what we've been able to accomplish together we delivered another stellar quarter to close out a phenomenal year. In fact, this was our seventh consecutive quarter achieving record revenues alongside favorable forward.

Josh Weinstein: Indicators like record booking trends and record customer deposits, indicating a continuation of the strong momentum we've been experiencing for the last two years.

Josh Weinstein: Fourth quarter net income improved by over $250 million year over year coming in over $125 million better than expected.

Josh Weinstein: The outperformance was up and down the P&L and driven by strong close in demand across the portfolio, which pushed yields per dms EBITDA and operating income all to new highs this year.

Josh Weinstein: Full year revenues hit an all time high of $25 billion and produced all time high cash from operations of almost $6 billion.

Josh Weinstein: Robust demand delivered a full year 'twenty 'twenty four yield increase of 11% with the majority of the increase attributable to higher prices yield.

Josh Weinstein: Yields finished the year nearly 250 basis points better than our original guidance driven by a strong demand environment that we elevated throughout the year.

Josh Weinstein: Encouragingly. This was broad based for 'twenty 'twenty four prices were up in all of our major brands and trades between mid single digit to mid teen percentages.

Josh Weinstein: And on top of this onboard spending levels actually accelerated sequentially each quarter throughout the year.

Josh Weinstein: Additionally unit costs came in 100 basis points better than our original guidance for the year as we identified and executed upon additional cost savings initiatives and saw the benefit of an easing inflationary environment.

All of this translated to an additional $700 million pick up to the bottom line compared to our December guidance and step change improvements in our two financial metrics that form part of our 2026 C change targets EBITDA per a L B D and ROI see.

Josh Weinstein: After just one year down with two to go we're already over 80% of the way towards achieving both of these targets, calling for a 50% increase in EBITDA per a L. B D from our 2023 starting point.

And ROIC of 12% both of which would be the highest the company has seen in almost 20 years.

Josh Weinstein: And with Rois see ending 'twenty 'twenty four at 11% comfortably above our cost of capital we are already delivering long term value for our shareholders. As we lay the foundation will build upon in 2020 five and beyond.

At the outset and with about two thirds of the year already on the books 20 twenty-five is shaping up to be another banner year with yield growth exceeding 4% far outpacing historical growth rates and again exceeding unit cost growth delivering more than $400 million incrementally.

Josh Weinstein: <unk> to the bottom line.

Josh Weinstein: In fact booking trends even accelerated during the quarter.

Josh Weinstein: Despite less inventory for sale as compared to same time last year 'twenty twenty-five booking volumes over the quarter were actually higher year on year at higher prices for each quarter, including the period, leading up to the election bookings.

Josh Weinstein: Booking volumes for 2026 also continue to break records, reflecting sustained demand even for further out sailings.

Josh Weinstein: The ongoing strength and demand reinforced our record breaking book position.

Josh Weinstein: With price and occupancy are higher for each of the four quarters of 2025, and we managed to increase both our price and occupancy advantage for our 20th twenty-five book position. Thanks to our outstanding efforts. This past quarter I can actually now report that our north American and Youre.

Josh Weinstein: European segments are each at their longest advance booking windows on record.

Josh Weinstein: All core deployments are also better booked at higher prices than the record levels. We achieved at the same time last year, so with a good amount less inventory to sell for 2025, I cannot stress enough to our customers and trade partners that if you want a sail with US this year book now.

Josh Weinstein: While there is still space available and.

Keep in mind, our 'twenty 'twenty four results and book position for future sailings are being driven by improved operational execution across our brands and are essentially on the same ship basis now don't get me wrong New ships are great.

Josh Weinstein: In fact, we welcomed three amazing new ships in 2024.

Carnival Jubilee the third of five X L class vessels for Carnival cruise line.

Josh Weinstein: Proudly sailing out of the great State of Texas, Some Princess Princess Cruises next generation flagship was just awarded <unk> Nast travellers 'twenty 'twenty four mega ship of the year, beating out all other mega shifts that entered service this year.

Josh Weinstein: And last but not least came the spectacular Queen Anne Qunar. Its first ship in 14 years and a beautiful addition to Queen Victoria, Queen Elizabeth and the Venerable Queen Mary two.

Josh Weinstein: While new ships do command a nice premium the vast majority of our yield growth was driven by fundamental demand improvements for the existing ships across our portfolio of world class brands.

Even excluding our new builds 'twenty 'twenty four is yields were still up almost 10% over 2023 that's because we're achieving demand growth well above our modest supply pipeline through ground up efforts to improve execution across the commercial space, we've been investing in both <unk>.

Josh Weinstein: And tools.

Josh Weinstein: In on each of our brand's unique target markets crafting marketing campaigns that speak directly to them and in the most effective forums, where success really enticing new cruise guests away from land based alternatives in fact, both new to cruise and repeat guests were each up double digits.

Josh Weinstein: <unk> just this past year at.

Josh Weinstein: At the same time, our marketing efforts are continuing to deliver growth and web visits natural and paid search that far outpace our limited capacity growth keeping the pipeline of new demand full simultaneously with augmenting our performance from top of funnel consideration.

Josh Weinstein: The closing of the deal and generating the bookings we've been sharpening our yield management techniques to optimize our booking curves and drive ticket prices in onboard spending higher.

Josh Weinstein: All of these efforts are already in flight and clearly working we have even more in store to continue the momentum.

Josh Weinstein: We're launching new marketing campaigns across all our brands.

Josh Weinstein: Princess Cunard and seaborne have already debuted spectacular new creators. This month in princesses case, it's fresh take on its incomparable love boat theme, featuring Hana wanting them of Ted lots of fans already helped to produce record booking volumes for the black Friday through cyber Monday period and.

Josh Weinstein: Stay tuned for new campaigns from Aida Carnival, Costa Holland America M. P. N O cruises in the U K all launching shortly to coincide with wave season, our peak booking period, we're aggressively working to increase awareness and consideration for cruise travel globally.

Josh Weinstein: We're also actively working on an enhanced destination strategy to provide guests with yet another reason to take a cruise vacation with us and that is sure to help us continue to excel.

Josh Weinstein: While we retained by far the largest footprint in the Caribbean with six owned and operated destinations that captured six and a half a million guest visits in 'twenty 'twenty four.

Josh Weinstein: We believe we have a meaningful opportunity to expand and capitalize on this strategic advantage. These destinations are amongst our highest rated guest experiences today.

Josh Weinstein: And we have plans to lean into these assets even further.

Josh Weinstein: While historically the marketing of our own assets have really focused on the ships, we have untapped potential to create demand for these amazing destination experiences.

Josh Weinstein: I have never been more excited about these prospects as we begin to unfold. This multi year strategy with the opening of celebration key in just about six months.

Josh Weinstein: This will be by far our largest and most carnival centric destination in our portfolio with five awesome portals built for fun.

Josh Weinstein: Family friendly to exclusive Beach club experiences not only well celebration key be the closest destination in our portfolio saving fuel costs and reducing greenhouse gas emissions. The only way you can get the celebration key is not one of our cruises.

Josh Weinstein: Moreover, we just recently announced a change that signals more about this shift in our destination asset strategy half Moon Cay, the highly rated and award winning exclusive Bahamian destination known for beautiful beaches, and Crystal clear waters is being renamed relax away.

Josh Weinstein: Half Moon Cay to better reflect the experience guests can expect as they are immersed in this tropical Paradise enhancements will include an expanded beachfront experience lunch venues a variety of bars and other features created with intentionality to reinforce this.

Josh Weinstein: Natural beauty and pristine appeal.

Ready in summer of 2026.

Josh Weinstein: Newly constructed peer on the north side will allow two ships to dock, including carnivals XL class ships that will be able to visit the private island for the first time.

Josh Weinstein: We'll be positioning these jewels of the Caribbean with consumers in a way that will encourage guests to actively seek out. These specific destinations offered exclusively by our brands and many of Carnival cruise lines itineraries will feature both relax away half Moon Cay.

Josh Weinstein: And celebration key providing guests with complementary experiences enjoying both the idyllic and the ultimate Beach days.

Josh Weinstein: We believe developing and promoting these unique assets will help us cast the net wider and capture even more new to cruise demand were already in flight with preparation for branding and marketing campaigns for these amazing destinations with more to come in the future.

Josh Weinstein: As it is for 2025, we expect to hit our 2026 EBITDA per a L. B D target a full year early while raising Rois C to just shy of our 12% 20 twenty-six target.

Josh Weinstein: So considering all the progress we've made without this in place. It's clear we have a tremendous amount of headroom remaining to create more demand to cultivate more guest loyalty and capture more pricing for the incredible ship and shore side experiences we provide our guests.

Josh Weinstein: At the same time, we're making meaningful progress on the sustainability front.

Josh Weinstein: We achieved about 17, and a 5% reduction in greenhouse gas emissions intensity versus 2019 on track to achieve our target of 20% by the end of 'twenty twenty-six a goal that was previously pulled forward by four years improve.

Improvement Hasnt just been in emission intensity levels. Despite.

Josh Weinstein: Despite the fact that we're over 9% larger than we were in 2019, we've actually lowered our absolute greenhouse gas emissions by almost 10% over this time.

Josh Weinstein: And of course, we're also making huge strides in rebuilding our financial fortress.

Josh Weinstein: In under two years, we've paid down over $8 billion of debt off our peak and significantly reduced interest expense, which coupled with our improving EBITDA has improved our leverage metrics tremendously.

Josh Weinstein: Our current 2025 guidance will put us at three eight times net debt to EBITDA closing in on our expectation to reach investment grade leverage metrics in 2026.

Josh Weinstein: Again.

Josh Weinstein: Thank you so much to each of our team members, who have delivered a step change improvement in 'twenty 'twenty, four and set us up for a fantastic 2025 and beyond.

Josh Weinstein: And as has always been the case and always will be thank you. So much to our travel agent partners, who have contributed immensely to this success. We also appreciate the support we've received from our loyal guests investors destination partners and other stakeholders.

Josh Weinstein: Let's not forget.

Josh Weinstein: These efforts were really all about the main thing.

David: Livery unforgettable happiness to over 13, and a half million people in 2024 by providing them with extraordinary cruise vacations, while honoring the integrity of every ocean. We sell places we visit and life, we touch with that I'll turn the call over to David.

Thank you Josh I'll start today with a summary of our 2024 fourth quarter results next I will provide an update on our refinancing and deleveraging efforts.

David: And then I'll finish up with some color on our 2025 full year December guidance.

David: Let's turn to the summary of our fourth quarter results.

David: Net income exceeded September guidance by $126 million as we outperformed once again, the outperformance was essentially driven by three things.

First favorability in revenue were 77 million as yields came in up six 7% compared to the prior year. This was 1.7 points better than September guidance, driven by close in strength in ticket prices as well as strong onboard spending.

David: Second cruise costs without fuel per available lower birthday, or a L. B day 2 million up seven 4% compared to the prior year. This was six tenths of a point better than September guidance, which was worth $13 million and third favorability in interest expense.

David: Other income and expense and tax expense all of which were partially offset by higher fuel prices.

David: Added to a 38 million dollar improvement.

Premiums for the fourth quarter improved over 5% versus the prior year, which I would remind you we're up over 10% last year with improvements on both sides of the Atlantic driven by higher ticket prices and improved the onboard spending.

Strong demand allowed us to once again report records delivering fourth quarter record revenues record yields record per Dms record adjusted EBITDA and record customer deposits.

David: Next I will provide an update about refinancing and deleveraging efforts.

Our full year 2020 for yield improvement of 11% was over three times or 3.5% cost increase.

David: This drove improved margins and cash flow, which resulted in a strong EBITDA of $6 1 billion in cash from operations of about 6 billion.

David: All of this propelled us on their journey to pay down debt and proactively manage our debt profile.

David: 'twenty 'twenty four we made debt payments of Gulf of $5 billion, which included Opportunistically prepaying over 3 billion of debt reducing secured debt.

Moving the secured second lien layer from our capital structure and paying off some of them more expensive debt.

We ended 2024 with 27 and a half billion of debt over 8 billion at the January 2023 peak.

David: Our leverage metrics continued to improve in 2024, as our EBITDA continue to grow and our debt levels continue to shrink.

We achieved a 4.3 times net debt to EBITDA ratio nearly a two and a half turn improvement from 2023 positioning US reports the way down the path to investment grade leverage metrics in just one year with.

With demand up there that well manage near term maturity towers and improved leverage metrics, we expect to opportunistically capitalize on improved interest rates, while proactively managing our maturity towers for 2027 M beyond with various refinancings.

David: Now I'll finish up with some color on our 2025 full year December guidance on.

David: On top of 2024 is 11% yield growth, we are expecting to deliver strong 2025 yield improvement with our guidance forecasting an increase of approximately 4.2% worth over 60 cents per share when compared to 2024.

David: The strong improvement in 2025 yields as a result of an increase in higher ticket prices higher onboard spending and to a lesser degree higher occupancy with all three components improving on both sides of the Atlantic.

David: We are well positioned to drive 20, twenty-five ticket pricing higher which significantly less inventory remaining to sell than the same time last year.

David: Now turning to costs.

David: Cruise costs without fuel per a L. B D is expected to be up approximately three 7% costing 28 cents per share for 2025 versus 2024.

David: We are looking forward to the introduction of our game changing exclusive Bahamian destination celebration K in July 2025.

David: We anticipate that celebration K will be a smash hit with our guests and provide an excellent return on our investment however.

David: However, operating expenses for the destination will impact our overall year over year cost comparisons by about half a point.

David: In 2025, we are expecting 687, Drydock days, an increase of 17% versus 'twenty 'twenty, four which will also impact our overall year over year cost comparison by about three quarters of a point.

David: In 2024, there were several onetime items that we benefited from impacting our overall year over year cost comparisons by about a quarter of a point.

David: The remaining 2.2 point increase in cruise costs are driven by inflation and higher advertising expense, partially offset by efficiency initiatives and further leveraging our industry leading scale.

David: An increase in depreciation expense and lower interest income is partially offset by an improvement in interest expense from our refinancing and deleveraging efforts for a net impact of four cents per share.

The net impact of fuel pricing currency is expected to favorably impact 2000, Twenty's high by approximately four cents per share with fuel prices favorable by approximately nine cents per share while the change in foreign currency exchange rate goes together way by five cents per share.

Yeah.

David: Let's not forget that the European Union allowance or EUA regulation in 2025 increases to 70% of carbon emissions from 40% in 2024.

David: As a result, we would expect the impact of higher EUA costs on a year over year fuel expense to be about three cents per share.

David: In summary.

David: All these factors together, our net income guidance for full year 2025 is over $2 3 billion, an improvement of more than 400 million versus 2024 or 28 cents per share.

Robust demand for our brands and continued operational execution is driving our strong financial results along with our increased confidence in achieving investment grade leverage metrics. During the next couple of years as we move further down the road rebuilding our financial fortress.

While continuing the process of transferring value from debt holders back to shareholders.

Now operator, let's open the call for questions.

Speaker Change: Certainly what I'll be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue and as a reminder, please ask one question one follow up then return to the.

David: Q.

Speaker Change: First question today is coming from Matthew boss from Jpmorgan. Your line is now live.

Speaker Change: Thanks, and congrats on another great quarter.

Speaker Change: Thank you very much Matt.

Speaker Change: So Josh could you elaborate on the foundation that you've laid over the last two years, what do you think its position in the company to capitalize on the current demand that youre seeing and with 25 shaping up to be another banner year could you speak to initiatives across the organization to take share optimize yields and drive onboard spending in 'twenty five.

Speaker Change: And beyond.

Josh Weinstein: Yeah. Thanks, Thanks for the question Matt.

Speaker Change: I.

Speaker Change: I guess, if we look back at the last two years.

Speaker Change: Probably the biggest thing was was just doing a bit of restructuring as we've talked about in the past and getting the right leaders in place leading leading the brands and those leaders are a fantastic group of people leading fantastic brands.

Speaker Change: On the.

Speaker Change: On the commercial focus side, which we've been talking about for the last few years right. It is it is scrutiny and expectations around how we're improving the revenue management space in the marketing space consideration set top of funnel stuff all the way down to closing the bookings.

Speaker Change: The amount of advertising that we've ramped up really just to get us closer to where the rest of the market is I think is helping to pay to pay dividends.

Everything from making sure our brands have great relationships with the trade to investing in our own capabilities.

Speaker Change: Probably the last thing about the foundation would be.

Speaker Change: The portfolio management, we've been actively managing the portfolio and.

Allocating shifts differently moving vessels winding up a brand in the case of PNR Australia.

Speaker Change: Setting ourselves up to really put the assets, where the highest returns are in the immediate term intermediate term, while we help all the brands, who aren't yet where I think they should be.

Get to those levels so.

With respect to 2025 and what are the things that we've got that are going to continue our progress.

Speaker Change: At a base level, it's a continuation of all of those things in the commercial space and having those great brand leaders really lean in even further.

Speaker Change: And in our people we are investing in our tools our revenue management tools to make sure that we are utilizing the technology effectively to optimize the yields the destination strategy that you already heard in the prepared remarks, I think that's going to be a tailwind that continues for a really long time.

Speaker Change: Really looking forward to that as far as the Ob are onboard spending.

Speaker Change: Got runway there I mean, we've got a good amount of runway to continue the progress we've been making around pulling forward the spend which as everybody knows opens up the second wallet and the more people spend before they get on the cruise or more of their spend on the cruise.

Speaker Change: So our brands are again working hard to continue that and we're nowhere near what the cap could be on those types of efforts.

I'm pretty enthusiastic as you could probably tell.

Speaker Change: I can tell I can tell and then David maybe just quick if you could just break down net cruise cost ex fuel components in that $3 seven for this year, but I think more so how best to think about maybe a reasonable spread between yields and cruise costs multiyear if there's maybe a back of the envelope rule of thumb multiyear.

Speaker Change: So I I did in my mind notes talk about the $3 seven because yes, just briefly at the expenses relating to celebration key were a half a point.

Speaker Change: Increase in dry dock days was three quarters of a point I also said about a quarter of a point was the.

Speaker Change: One time items that we benefited from in 2024, and then the remaining 2.2 points really was a combination.

Speaker Change: Inflation and higher advertising.

Josh Weinstein: Josh mentioned.

Partially offset by efficiency initiatives and other leveraging our scale throughout the company. So those are really the four key components that make up the three seven.

Josh Weinstein: As far as the difference you know I don't think there's any rule of thumb here I really do believe we can.

Josh Weinstein: Can you as you saw.

Josh Weinstein: 'twenty 'twenty four it was three times, but that was a recovery story.

Our guidance has a half a point difference between the yield improvement.

Josh Weinstein: And our cost improvement and keep in mind that a point of yield is worth almost double what our point of cost is.

So there is leverage there.

But we will work hard to continue to maintain our cost consciousness and as Josh talked about.

Josh Weinstein: All of the things, we're investing in advertising and revenue management should help drive yields higher over time as well as the destination strategy. So we do expect to see a continued improvement in margins.

Speaker Change: Great color best of luck.

Thank you. Your next question is coming from Ben taken from Mizuho Securities. Your line is that a lot.

Hey, Thanks for taking my questions.

Speaker Change: Celebration keel, it's pretty exciting opening up later this summer where do you think you are in the customer awareness of this product or do you think it's well understood or appreciated by customers or is it still or is that marketing kind of like and then an awareness still ramping and then I have one follow up thanks.

Speaker Change: Thanks, Matt definitely still still ramping I mean, it doesn't exist yet.

Speaker Change: So we are definitely building momentum there we're building excitement we're getting.

Speaker Change: The response that we expected with respect to how the bookings are shaping up which is good to see but it's still early days I think the really exciting part is once were once we're in there are really operating and having guests enjoy these experiences in optimizing what we do and how we do it.

It takes off from there because right now to make believe so we've got a we've got to let everything.

Speaker Change: Get in place and then I think it will help tremendously.

Speaker Change: Got it understood and then and then in the release and call.

Speaker Change: Transcript you referenced an enhanced destination strategy.

Speaker Change: Can we open this up a little bit does this refer to celebration key or just a little bit of a teaser to an additional traditional opportunities to provide guests with differentiated carnival owned operated destinations and I know you mentioned appear at half Moon Cay I believe just trying to understand the magnitude and direction of the strategy.

Speaker Change: So, let's take a step back from any one particular destination I think.

Speaker Change: Seen for a long time now for several years and I think some are doing better than others and better than us is turning their own destinations into something that not only guests, but non cruisers look at and decide that's going to help tilt my vacation decision to take a cruise because the destination itself looks amazing.

<unk> is an amazing experience and I can only do it on a cruise.

Speaker Change: And we have not historically I think done a good enough job in raising the level of awareness on the amazing destinations that we have another one in the pipeline. So when it comes to celebration key we're getting a head start because were doing it before the relocation exists.

Speaker Change: When you think about the change to relax away for half Moon Cay.

It is beautiful it is one of the most stunning destinations in the world and yet if you're not a cruiser you don't know anything about it youre not looking for it.

Speaker Change: And we're going to change that dynamic and with relax away what were trying to convey to people who don't cruise is is really the five of the experience that they can get and the great thing about it is we're leaning into that natural beauty, which is going to be different from celebration cake celebration key as we said that is the ultimate Beach day right.

Speaker Change: That's a way is all about the idea that it's being in a tropical paradise, and we're going to be able to marry those two things together. So people on the same crews will be able to get both experiences that are very very different and exclusive to us and so we're going to raise our game there and there's more things that we can do without heavy investment with some of the destinations that we own.

Speaker Change: Make that part of that more exclusive collection. So early days, but we're pretty excited about it.

Speaker Change: Very helpful. Thanks.

Speaker Change: Thank you next question is coming from Steve Rucinski from Stifel. Your line is now live.

Steve Rucinski: Yeah, Hey, guys good morning happy.

Speaker Change: Happy holidays to tell you guys.

Speaker Change: So Joshua David if we think about the yield guidance for for 2025.

Speaker Change: Just based on the fact that Europe, two thirds booked already for next year.

Speaker Change: It seems like you have strong pricing momentum across pretty much all your geographies.

Speaker Change: You'll hit that I'll say this but it seems like the 4% or approximately 4% yield guidance do you have to us might end up being conservative.

Speaker Change: We have this same call a year from now so I guess the question is can you give us a little color around the makeup of that yield forecast and maybe it doesn't seem like you could be taking a conservative view around.

Speaker Change: Whether it's onboard trends, whether it's the close in pricing opportunity.

Speaker Change: And if I asked that question another way I mean, if we think about the your initial yield guidance last year, which I think was 8% and it ended up.

Speaker Change: Ended up closer to about 11% what did you guys underestimate for for 2024. Thanks.

Speaker Change: Well first of all we were a little worried you weren't first in the queue. So we're going to literally calling them a wanted to make sure you were you were okay.

Speaker Change: Glad to hear your voice.

Speaker Change: Good good good.

Speaker Change: Right.

Speaker Change: Our goal is to give guidance based on what we know.

Speaker Change: Certainly something that we want to meet and obviously work hard to exceed.

Speaker Change: Last year I meant what I said in my prepared remarks, I think it was a fantastic year by the whole team that outperformance.

Speaker Change: I would argue was pretty pretty special.

Speaker Change: Also argue that 250 basis points of yield on top of a base of two of eight 5%.

Speaker Change: Proportionally is.

Speaker Change: Not two 5% on top of four 2%.

Speaker Change: So we have a very good handle I think on where we are today much more so than last year, even because we're already back up and full already at full occupancy percentage more or less and we always get and if you remember the first half of the year, we're still in catch up which is about five points of our improvement in yields last year was.

Speaker Change: Occupancy so I think we're in a more stable place than we were well the onboard spends have been fantastic Theres no doubt about it and we're working hard to continue that trend and when you look at the four 2%.

Speaker Change: There is a little bit for occupancy, but it's all price right outside of a little bit of occupancy its price and it is a combination of the ticket side and the onboard by continuing and we'll work hard to optimize as much as we can I promise you. Our goal is the same as yours, which is get as much revenue as we can.

Speaker Change: Okay. That's good color and then Josh if we look at slide.

Slide 17.

Speaker Change: Sure.

Speaker Change: About sea change you noted your EBITDA pretty L. B D. It's going to be hopefully achieved in 2025, but if we look at your ROIC targets, we look at the even the carbon reduction target I mean, it's almost like youre going to hit those potentially hit those as well next year. So.

Speaker Change: I guess the question is just and I know you're going to hate this but do you start to think about laying out another.

Speaker Change: Set of long range financial targets.

Speaker Change: Some point.

Speaker Change: To us it seems like the sea change targets really were important pillars and gave the investment can we do something to up to really rally behind so im just trying to get a little bit more color as to how youre thinking about the long term opportunities here yes.

Speaker Change: Look when we get there I can I can tell you that whether we whether we do it on the same day or whether we wait a quarter to catch our breath I can promise you I like the concept of longer term targets that we set for ourselves and we set for our investors. So you can understand what we think our trajectory should be and I can motivate my team internally.

Speaker Change: Rally around what I think we should be expecting of ourselves. So yes, you can expect that to happen when when we get there.

Speaker Change: I would love nothing more to give.

Speaker Change: To where we were.

Speaker Change: Or would you say, we're going to be in 2000 2060 change targets early.

Speaker Change: We need about 100 million Bucks.

Speaker Change: <unk> operating income to get to the ROIC carbon will be harder, we have a pretty good understanding of where we are but.

Getting to 19%.

Speaker Change: Pretty good and well see what happens.

Speaker Change: Okay got you.

Speaker Change: A real quick housekeeping wise, David is there anything we should think about in terms of cadence of costs. Obviously, we've got the first quarter NCC guide, but anything else through the rest of the year, we should think about.

Speaker Change: So as you can imagine is tough in terms of seasonal elevation between quarters, but.

Speaker Change: The guidance that we gave you is that in the second quarter, we do expect higher dry dock days, so I wouldn't be surprised if the second and third quarter, where call. It one and a half to two points above the full year average in the fourth quarter is lower.

Speaker Change: That's about the best initial guidance I can give you.

Speaker Change: But we too.

Speaker Change: We'll probably see some changes because this guidance presumes. We've made every decision on all advertising and everything else between the quarters. So just take it as a forecast okay. Thanks, guys happy holidays.

Speaker Change: Sure.

Speaker Change: Thank you. Your next question is coming from Robin Farley from UBS. Your line is my life.

Speaker Change: Great. Thank you, obviously fantastic guidance here.

Speaker Change: And there was an expected I did want to ask about two things just to get a feel for whether these things are in your guidance or how much. They are in your guidance and whether this would be additional upside.

Speaker Change: First is celebration key you mentioned, obviously you expect it to be very successful and a driver, but you're not really able to see at this point, what I would add really to ticket price or onboard spend so I'm. Just wondering if you could help us understand how much you really how little you may have in your yield guidance today for celebration key I know in your <unk>.

Cost guidance is that 50 basis points, how much is it in your yield guidance at the moment. Thanks, Yeah. Thanks Robyn.

Speaker Change: So it is in our guidance, but I'll give you some magnitude of just what touches celebration this year and it's only 5% of our total sailings in 2025, so it's not that much when we get to 2026 somewhere around kind of a full year run rate basis, you are talking about 15% plus so so there'll be more.

Speaker Change: Meaningful for the company overall.

Speaker Change: Nonetheless, I'm not going to say what it is but we're happy to say that when we look at our bookings in the fourth quarter for Carnival. We are seeing the premium that we expect it to see which is good news.

Speaker Change: Okay, great. Thank you and then also in your EPS guidance.

Speaker Change: I think that you have $3 billion in debt. That's callable next year I hope I'm getting this number right, but it is I assume that youre not factoring in the lower interest costs from some of that very expensive debt that were redone at maybe what some other things. This year have been done that could that be 20, or 25 cents of sort of.

Speaker Change: Upside annual.

Speaker Change: Interest expense savings is that kind of a ballpark to think about potential upside.

Speaker Change: So 'twenty to 'twenty, five 'twenty would be $280 million because its 14th.

Speaker Change: Her penny so just keep that in mind I'm not sure. What what you were thinking of I will say that there is opportunity on the refinancings.

Speaker Change: We do expect to address those two.

Double digit interest rate debts that youre, referring to they are both callable as you said in the first half of the year there will be some additional savings we do it we will look at that throughout the year. We did include just a bit of saving interest savings in our forecast, but because we're not sure what the market will bring in terms of interest rates.

Speaker Change: It was.

So there is hopefully we will have a number of successful transactions this year, which will provide some upside for I should say some lower interest expense.

Speaker Change: Okay, great. Thank you very much thanks.

Speaker Change: Thanks, Rob.

Speaker Change: Thank you. Your next question is coming from James Hardiman from Citi. Your line is that right.

Speaker Change: Yeah.

James Hardiman: Hey, good morning.

James Hardiman: So I wanted to ask maybe a big picture question, obviously, not a whole lot of capacity being added here and so so much of this growth.

James Hardiman: Growth story as is.

James Hardiman: It's organic obviously.

Speaker Change: So I guess my first question is how much of that organic turnaround.

Speaker Change: It's a function of sort of factors taking place in the industry versus I don't know self help right. You've listed obviously, a whole bunch of things that youre doing brand by brand.

Speaker Change: I'm ultimately trying to figure out sort of the sustainability of this organic.

Speaker Change: Growth that we're seeing right now.

James Hardiman: Yes, Hey, James How're you doing.

James Hardiman: Matt I wish I could tell you with a scientific answer to your question is about the industry overall versus US I think I think the industry being more mainstream along with US are certainly a fantastic thing for everybody.

James Hardiman: I don't want to discount that but.

James Hardiman: Not what I said about same ship sales.

James Hardiman: We got almost 10% yields.

James Hardiman: On same ship and in.

James Hardiman: If you look at our history, our historic growth rates on revenue are significantly lower than our crews competitor set.

James Hardiman: And when you look I don't know what theyre going to do next year, but when you look at this year.

James Hardiman: Sure.

James Hardiman: Right in the mix and are at the top so I.

James Hardiman: I feel very good that our trajectory is changing for us versus what we had been accustomed to and it means we've got a pretty good amount of headroom as we look forward because people should be paying more for our experiences.

James Hardiman: Not only vis vis our crews competitors, but I'm talking about the vis vis the experience gap.

James Hardiman: That exists on what we do versus what land offers what we call the price to experience ratio is just remarkably skewed.

James Hardiman: We should be getting a lot more versus what competitors do but I think it's probably a pretty good sign.

James Hardiman: That I'm right about that and the potential when you think about Disney.

James Hardiman: It basically say, we're going to underinvest in things that we have in the past, but we're going to double down on crews.

The value of that as well so I think we're in good company and we've got a lot of self help along the way.

James Hardiman: Got it and then.

James Hardiman: I guess along those same lines.

James Hardiman: So I guess in a lot of ways I'm asking some previous questions in a different way but.

James Hardiman: You finished 24 per Dms up north of 5%.

Speaker Change: The guidance for the year, because the yield guidance is for two theres some occupancy in there.

Speaker Change: And then first quarter is $4 six so we're growing five plus four 6% to something lower.

I guess from our perspective, right celebration key which comes on in the back half should should actually help with some acceleration I guess is there anything quantifiable.

Speaker Change: That we should be thinking about that would weigh on <unk>.

Per Dms as we work our way through the year, maybe an itinerary geographical mix issue or is this just you know.

Speaker Change: You get some version of this question every quarter right is this just sort of conservatism. The further out you look.

Speaker Change: Yeah.

Speaker Change: The same answers that we've been giving right we're trying to b.

Speaker Change: As transparent as we can be with everyone on the call and everyone who is not on the call. We havent been through wave yet we will although although it's been a remarkable ride for two years it feels like wave hasn't stopped since.

Summer of 2022.

Speaker Change: But we haven't been there yet.

Speaker Change: So, we'll see what that brings us and.

Speaker Change: We will talk again in March.

Speaker Change: Got it I appreciate it.

Patrick Schultz: Thank you next question is coming from Patrick Schultz from Truest July this is ally.

Speaker Change: Patrick perhaps your phone is on mute.

Speaker Change: Hi, Good morning can you hear me Patrick.

Patrick Schultz: Great great. Thank you.

Speaker Change: I want to ask a little bit.

Patrick Schultz: Mexico for my first question.

Speaker Change: <unk> out there lately.

Speaker Change: Guarded.

Speaker Change: First of all passenger charges on that.

Speaker Change: Is do you Josh.

Speaker Change: Deal.

Or is there any chance that that may not go through at this point and then.

Particularly for your folks for you or for you.

Speaker Change: Your shifts what percentage of your <unk>.

Speaker Change: Itineraries do make a stop at.

Speaker Change: A port in Mexico. That's my first question. Thank you.

Speaker Change: Yes.

Speaker Change: So right off the bat no I do not think it is a done deal.

Speaker Change: We have.

Speaker Change: Ben.

Speaker Change: Dealing with this with the folks in Mexico for the last few weeks, we were not consulted.

Speaker Change: No one was consulted when this was passed it was pretty it's pretty clear to me I have a lot of respect for the president and what she is doing.

She was.

Speaker Change: Miss informed not informed and.

Speaker Change: And no one of them is making through the ramifications of what they were suggesting and Theres. A reason why cruise is in transit historically.

Speaker Change: As opposed to people, who fly into Mexico and stay there for several days. So it's already been pushed off the July 1st we're not satisfied with that we want to have good dialogue with the government and explain all the benefits that we bring to Mexico, which are significant and it doesn't take much.

Speaker Change: To tweak itineraries to effectively erase would be.

The proposed.

Speaker Change: Proposed tax is on the industry and so I feel.

Speaker Change: We are engaged in those conversations we hope to have more after after the new year, but it's definitely not settled and we have nothing in the forecast for these changes for the for the tax just so everybody knows.

Speaker Change: I think for the year as far as.

Speaker Change: As far as what what the impact would be.

Speaker Change: For 2000 2025, assuming it did go into place and we made no changes.

Speaker Change: <unk> in July.

25 is less than 5% of our itineraries for.

Speaker Change: For the year.

Speaker Change: Okay.

Speaker Change: Okay.

Certainly.

Speaker Change: The fluid situation and then a follow up question.

Speaker Change: On the.

Speaker Change: Year over year growth rate in your passenger ticket revenues versus year over year growth rate in your commissions transportation and other.

Speaker Change: The past several quarters those growth rates sort of moved in.

Speaker Change: In line or lockstep. This most recent quarter you did have a noticeable.

Speaker Change: The increase in passenger ticket revenue percentages higher than.

The commission paid out are you starting to see.

Speaker Change: Seeing more book direct or anything to read it.

Speaker Change: Thank you.

Speaker Change: Patrick.

Speaker Change: We should talk after the call I thought it was a pretty close several tenths of a percent or something very close oh, okay revenue.

Speaker Change: Okay I'll talk about a lot of different we'll talk we'll talk about that after the call, but anything anything else did too.

Speaker Change: Nothing wrong with the <unk>.

Speaker Change: <unk>.

Speaker Change: Numbers as you know do vary a little bit from quarter to quarter because of currency and the amount of <unk>.

Speaker Change: ASC mix that we have.

Speaker Change: But nothing significant or otherwise.

Speaker Change: Okay. Thank you for the clarification.

Patrick Schultz: Thanks, Patrick.

Speaker Change: Thank you. Your next question today is coming from David Katz from Jefferies. Your line is now live.

David Katz: Hi afternoon covered thank you for taking my question covered a lot already I wanted to get a sense for the cost side of the equation right.

David Katz: The variability within there right the degree to which and what would have to happen for you to turn out a little bit better.

David Katz: On the cost increases that you may have built into your guidance.

David Katz: And then I have a quick follow up.

David Katz: Yes, so the.

David Katz: If we're talking about the full year.

David Katz: And the three 7%.

David Katz: The thing that is likely to change over time.

David Katz: Is most likely to be the efficiencies we find in the magnitude of those efficiencies.

David Katz: We are constantly working hard we have lots of ideas out there. It is always very difficult to figure out.

David Katz: The exact timing and we did build quite a bit into our guidance and into our forecast.

But we continue to work hard to improve on those and so last year, we were able to exceed our expectations were.

David Katz: And we will work hard to try to do better this year, but it's very hard on the timing of all these items.

Plus.

David Katz: We built in inflation, something a little bit less than 3% and trying.

David Katz: To get that number perfect I mean, if you know absolutely in every category what inflation will be in 2025, and let me know because we did the best we could.

David Katz: But im sure.

David Katz: Some of those pieces are going to be off as I always say, there's only one thing I know about every forecast it's wrong I, just don't know by how much and in what direction.

David Katz: Yeah.

Speaker Change: Well said I wanted to follow up just on the leverage side of things when I look back historically.

David Katz: Yes.

David Katz: Where the company has operated.

David Katz: Obviously, making good progress today, but should we be thinking about the two times or better.

David Katz: As a long term aspirational target is that still achievable.

David Katz: Well.

Speaker Change: I'm proud of former treasurer of the company.

Speaker Change: It's not a target we have for ourselves right now our target right now is get to investment grade metrics, which is at the three five times, how strong we want to rebuild that fortress.

Speaker Change: That's still up for.

Speaker Change: Thats up for a decision.

Speaker Change: Do we need to be.

Speaker Change: An a minus rated company again bordering on a which is some of the some of the situations. We found ourselves and I could argue no we don't need to.

Speaker Change: Do we want to be a solid investment grade absolutely so as we get closer to <unk>.

Speaker Change: Closer to that metric, we're obviously going to be having conversations with our board to really set out what we think the right balances between that balance sheet strength investing in ourselves investing in our in our shareholder returns via dividends or buybacks will remains to be seen what the formal being wet.

But that all goes into the mix, but I would say nobody should be thinking about a two time theres a target we're setting for ourselves.

Speaker Change: Thank you very much I appreciate it.

Speaker Change: Thank you. Your next question today is coming from Jamie Katz from Morgan Stanley I'm, sorry from Morningstar. Your line is that life.

Hey, good morning. Thank you for taking my questions first I am hoping that you guys can talk a little bit about waiver season, I guess I'm trying to understand how to think about balancing killing the rest of 2025 with pulling forward more demand from 2026, and whether or not one is.

Speaker Change: A better strategy than the other without giving too much competitive information away is there a way to I guess.

Believe in less than you are bundling now and maybe promote less.

Speaker Change: In order to optimize pricing thanks.

Speaker Change: Yes so.

Speaker Change: It's a little bit of a hard question to answer.

Speaker Change: <unk> actively and have been actively selling 2025 and 2026 for some time as you as you might have picked up in the prepared remarks, we actually just set a record.

Speaker Change: This past quarter for booking activity for the further year out. So 2026 in this case. So I think our brands are actually when it comes to revenue management and optimizing the shape of the curve they.

Speaker Change: We're doing a pretty solid job across the board, which doesn't mean, there's not a lot of room for improvement, but a pretty solid job so everyone's hitting.

Speaker Change: Wave.

Speaker Change: Slightly different positions with respect to how much they're booked for 2025 quarters.

Speaker Change: Quarters, So I'd say, it's a case by case decision about how theyre going to be tackling wave I would say everybody does promotions and wave.

EVAR is how you get people interested in incursion.

Speaker Change: During this critical period, but I will remind you we did promotions last year, and where we ended up with 11% yields.

Speaker Change: So so the promotional.

Speaker Change: Tactics and tools that we use are they are healthy.

Speaker Change: And they're part of the process that we go through.

Speaker Change: Yes.

Speaker Change: And then the other question I have is a little bit.

Speaker Change: Longer term strategic question right, we know what the costs are affiliated with them.

Speaker Change: Celebration Kiva.

Speaker Change: Summer, but.

Speaker Change: I suspect that this isn't a London, one and done project. So is there some non new build capex.

Speaker Change: Should be thinking of like level that will be in the years.

Speaker Change:

Speaker Change: And these brand building projects longer term that might be higher than it was in the past.

Speaker Change: That's a fair question I think if you think about the things that we've been investing outside of outside of the Newbuild celebration kidneys appear half Moon Cay.

Speaker Change: How EDA evolutions, right, which is their mid ship refurbishment plan.

Speaker Change: He is.

Speaker Change: Much to Carnival chagrin, Aida is pretty much neck and neck with carnival for highest returning brands in our portfolio, we're making the right investments in non newbuild to continue the momentum that we have as far as what the ultimate level is on a run rate basis goes.

Speaker Change: We don't I don't have a number for you that I that I would stick to this is over the next six years or seven years. This is what you should expect but clearly we're making these investments on the basis that they're going to support the improved returns that we demand of ourselves.

Speaker Change: So it's about 600 million for celebration key as we've talked about it's another few hundred million for what we're doing at relax away half Moon Cay.

Speaker Change: And evolution for any one particular ship that theyre going through this process you are talking about tens of millions, but we think it's tens of millions that really is going to be a boost for a brand that is incredibly high return on.

Speaker Change: So.

Speaker Change: I don't know David if you want to add any more color. The only thing I'd say is I mean, you saw you saw in the press release, what our number was for 2025.

Speaker Change: In all likelihood, it's going to be something similar to that going forward, but it's hard to say exactly what it will be every single year.

Speaker Change: Because there's so many bigger decisions that we'll be making over time, which will make up that number.

Speaker Change: One thing I would say about the destination side as celebration key at half Moon Cay are a little bit unique in scope and size of what we're doing.

Speaker Change: The other destinations we have in our footprint there are amazing and we will spend some money over time to do some things that make the experience better and better opportunity for us to generate returns, but I don't see other than maybe a continued expansion of celebration key as we've already been talking about through the end of this decade I'm not sure I see on the horizon or anything.

Speaker Change: That I would flag for you right now is kind of out of the blue.

Speaker Change: That we'd be talking about in six months earlier.

Speaker Change: Great. Thank you.

Speaker Change: Last day.

Speaker Change: Next question go.

Speaker Change: Go ahead I'm sorry.

Yes, let's just take one more question where appropriate.

Speaker Change: Sure thing our final question today is coming from Brett I'm on tour from Barclays. Your line is that life.

Brett: Good morning, everybody. Thanks for taking my question and congratulations on the results today.

Speaker Change: So the first question.

Speaker Change: So my first question is on the booking curve, Josh and I don't know if this is an easy one to answer but when you when you're trying to take the forecasting out of it and you're just focusing on your booking curve today versus the way or versus how you are booking your bookings looked at the same time last year.

Speaker Change: Does the pricing look any less robust than this time last year, perhaps tougher comps or anything else that you would highlight.

Speaker Change: Well I mean, it's certainly tougher comps this year than it was.

Speaker Change: Last year the brands.

Speaker Change: As I've said, though.

Speaker Change: Paired remarks.

Speaker Change: We're basically at a higher occupancy at a higher price point and that's across all four quarters.

Speaker Change: I think the brands are doing a good job of continuing the momentum and optimizing.

Speaker Change: Optimizing that.

Speaker Change: That curve so it probably doesn't answer the question the way you'd like it to but.

Speaker Change: We will see where that where that shakes out we gave you our our view of yields as of now.

Date, you is there's things to update.

Speaker Change: Okay, great. Thanks, and then just a quick housekeeping the Red Sea had a.

Speaker Change: Something like $130 million impact last year, how much of that.

Speaker Change: Actively do you get back in 'twenty, five and sort of how should we think about the timing of it and the cadence and where it would kind of show up in the comps.

Speaker Change: So I think what it all shake out it was probably a little less than $100 million at the end of the day as we did our analysis for 2024 I think the thing about year over year for 25 that people need to keep in mind, it's not a huge spring back and the reason why.

Speaker Change: If you think about this time last year, we had already sold our world cruises people, who are already on them.

Before the Red Sea became a thing.

Speaker Change: We had to scramble we did everything we had to do a cost of $90 million. This year. We're in a different place, which is we knowingly took <unk> out of the equation back in.

February March for 2025, which meant we had to sell cruises that werent necessarily as attractive to sell because you can't go through the Red Sea.

So from a year over year, it's a different kind of a pain point that we had to deal with.

Speaker Change: We've dealt with and it's in our numbers.

Speaker Change: But it means that you'd love to see us kind of this bounce back.

Speaker Change: Hall, and we move forward I don't think 25 versus 24 is really the year that we will see that the normalization is now and so 26 versus 25 will be on an apples to apples basis.

Speaker Change: Because of lower yields offsetting no disruption this year more or less in high level. Yeah. That's fair. Okay. Alright, Congrats again guys. Thanks, Thanks very much grant okay. So with that I think we're over time, so I would say happy.

Speaker Change: Happy holidays, and wishing everybody on the call nothing but good.

Speaker Change: Good health and happiness in 2025, thanks very much for joining.

Speaker Change: Thank you that does conclude today's teleconference. You may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.